Prof. Dr. Robert Fieten
Transcription
Prof. Dr. Robert Fieten
Prof. Dr. Robert Fieten Director Management Research Team, Cologne (Germany) und Member of the Board of BME, Frankfurt/Main (Germany) robert.fieten@netcologne.de Procurement Procurement Strategies Strategies of of the the German German Manufacturing Manufacturing Industry: Industry: How How to to Become Become aa Preferred Preferred Supplier Supplier © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 1 Look upon the crisis like the Chinese: Combination of risk/threats and opportunity © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 2 Agenda Why Leveraging Procurement and Supplier Relationship Management are Crucial for the German Manufacturing Industries What is going on in the Supply Markets with the Economy Rebounding? How to become a Preferred Supplier 14.04.2010/ Seite 3 © Prof. Dr. Robert Fieten 2010 Two old wisdoms to start with People do not understand how important is thriftiness as a source of income. (Marcus Tullius Cicero) When the wind of change is blowing, you can build walls or - windmills. (Chinese wisdom) © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 4 … and a new wisdom follows 2009/2010 have been for the German manufacturing industries the years of procurement and supply management! Procurement and supply management have been for our manufacturing industries and even the service industries effective strategic levers to face the challenges of the recession! Buyers´ markets in 2009 offered new opportunities and windfall profits. But will this continue? © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 5 In 2009 the German industry suffered from the sharpest downturn after world war II © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 6 Low capacity utilization in the metal and electrical industries © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 7 But: Positive expectations and good facts are back; bookto-bill ratios are improving © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 8 The recession seems to be over! But is the crisis under control? © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 9 Manufacturing recovery is in full swing worldwide © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 10 More manufacturing orders and inventory cycle ending © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 11 What is needed to come out stronger of the crisis? Work smarter not harder not only within your own company but also in the whole supply chain. Become agile instead of clumsy and bureaucratic. Focus on your technical know-how and sharpen your unique selling proposition/profile. Do the splits between intelligent cost saving and innovating for new businesses. © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 12 Which are the key tasks of procurement in the current economic situation? Stabilize the EBIT margins not through squeezing only the prices but through optimizing the total material costs of ownership together with the preferred suppliers. Optimize the capital employed in the supply chain. Manage the risks in the supply chain (insolvencies of suppliers we depend on). Work smarter not harder with your preferred suppliers. 14.04.2010/ Seite 13 © Prof. Dr. Robert Fieten 2010 Excellence in procurement pays off Operative Margin Other Costs Staff Costs EBIT margin in % Costs of Purchasing Profit contribution of procurement Trade 3,4 52% Foods 2,5 60% MCR = Material Cost Reduction in % of the total material costs/spend Chemical Industry 5,0 24% EM = EBIT Margin % Mechanical Engeneering 3,3 0% 25% 50% 75% 43% MC = Material Costs in % of revenues PI = Profit Impact of procurement as compared to necessary revenue growth 100% MC x MCR PI = EM Reducing material costs by 3% has the same profit impact like increasing turnover by © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 14 Agenda Why Leveraging Procurement and Supplier Relationship Management are Crucial for the German Manufacturing Industries What is going on in the Supply Markets with the Economy Rebounding? How to become a Preferred Supplier © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 15 What has been changing for procurement throughout the crisis? The good message for purchasing managers: The sellers´ markets of the boom that made life very difficult for the purchasing managers throughout the last three years have become buyers´ markets in 2009. Two bad messages for purchasing managers: (1) Supply shortages and prices going up. (2) The risk of suppliers´ defaults have increased and will further increase through 2010. © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 16 Supercycle of the commodity prices was only interrupted! © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 17 © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 18 Challenges: Higher material prices and longer delivery periods © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 19 Agenda Why Leveraging Procurement and Supplier Relationship Management are Crucial for the German Manufacturing Industries What is going on in the Supply Markets with the Economy Rebounding? How to become a Preferred Supplier © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 20 Expectations towards preferred suppliers (after the recession) Quality excellence and reliability of supplies and services Liability and warranty according to customer needs Competitiveness as to prices and productivity increases Innovational capability: target cost achievement for products and projects, synchronized technology roadmap Complementary capabilities: together we are stronger Financial stability/solid balance ratios Transparency and communication 14.04.2010/ Seite 21 © Prof. Dr. Robert Fieten 2010 Forms of cooperation OEM/suppliers Market based competition Selective competition Selective partnership Basis der Beziehung Daten Informationsaustausch Wissensvermittlung Aufbau von Fachwissen Dauer des Einsatzes Transaktion (kurzfristig) Jahresvertrag Lebensdauer Über die Lebensdauer der Baureihe hinaus Keine Lieferanteneingliederung Begrenzte Lieferanteneingliederung in die Produktentwicklung, entlang festgelegter Schnittstellen Lieferanteneingliederung in die Produktentwicklung, gemeinsame Bestimmung der Schnittstellen Eingliederung von Bereichen/Teams, gemeinsames Konzept u. Produktentwicklung, Investierung in gemeinsame Anlagegüter Kugelschreiber Pressteile Auspuffsysteme Antriebssystreme Grad der Eingliederung Beispiele Strategic alliance Minimierung des Stückpreises Minimierung der GesamtSystemkosten Taktische Taktische Beziehung Beziehung Strategische Strategische Beziehung Beziehung Quelle: VDA-Papier © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 22 Role of procurement and preferred suppliers in the product innovation process © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 23 The relationship with the suppliers must be defined © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 24 Conclusion What you suppliers should recommend to your customers/the buyers: Do what you can do best, and outsource the rest. What you need in challenging times is confidence in your own capabilities: There is no job too immense, when you have confidence (Elvis Presley) © Prof. Dr. Robert Fieten 2010 14.04.2010/ Seite 25